How Safe is Taiwan’s Food?

Good eating has long been one of the joys of living in Taiwan, but a series of food-related scandals has left the public concerned about the safety and reliability of the food supply. Although the government has been taking action, the problem is not easy to resolve, given the large number of unregistered factories and food providers.

In the wake of a slew of shocking food-safety scandals over the past four years, Taiwan’s reputation as a gastronomic paradise is under threat. Beginning with plasticizer found in cold drinks, jams, and pastries, followed by tainted starch products and counterfeit olive oil made green with a chemical additive, and culminating in last year’s horrific waste-oil scandal that embroiled several of Taiwan’s most venerable firms, the series of incidents has crushed consumer confidence in the safety of the food supply. The brazen malfeasance of prominent players, especially Wei Ying-chun of the tycoon Wei brothers, not to mention the inadequacies exposed in the government regulatory system, outraged the public as much as the gory details of tannery waste and diseased animal corpses mixed into food oil.

The public demanded action, and the government, including the judiciary and legislators, responded.

The Legislative Yuan amended the law to impose steeper fines and tougher prison sentences for violators, and added the word Safety to the statute – now called the Act Governing Food Safety and Sanitation. Prosecutors indicted violators operating throughout the oils supply chain, and the perpetrators, including high-level executives, have either been sentenced to lengthy prison terms or remain in custody awaiting trial. And the Executive Yuan, for its part, has decided to add 70 new inspectors to the Taiwan Food and Drug Administration (TFDA) staff to improve the authorities’ ability to conduct meaningful monitoring.

Night market vendors are demanding more documentation from their upstream vendors so they can assure customers of the safety of the food being offered.

Even more significant was the Executive Yuan’s creation of an Office of Food Safety (OFS), an independent body to coordinate policy, information sharing, and inspections among the various ministries and agencies responsible for food safety, including the TFDA under the Ministry of Health and Welfare, Council of Agriculture (COA), and Industrial Development Bureau of the Ministry of Economic Affairs. The OFS, currently headed by Acting Director-General Tsai Shu-jean, reports to the deputy premier and ultimately to the premier, and is also involved in the establishment of a “food cloud” that promises to enhance inter-ministry tracking of food materials, ingredients, and additives.

But are these moves sufficient? Is Taiwan putting enough resources toward finally solving its food-related problems, and are those resources being put where they will be most effectively utilized? While most experts agree that progress has been made, many also say that much more needs to be done to satisfactorily ensure the safety of Taiwan’s food supply.

Former TFDA director-general Kang Jaw-jou, now a professor in the Institute of Toxicology at National Taiwan University’s College of Medicine, says he is surprised that the administration has not put even more effort into resolving the issues, considering the sharp rebuke delivered by the electorate to the ruling Kuomintang (KMT) last fall. Political analysts have attributed the KMT’s dismal performance in those elections in no small measure to the perception that the government in power had not done enough to prevent such problems. Although he expected the pointed defeat at the polls would spur more rapid change, Kang says he is not totally pessimistic. “We are getting better, but very slowly,” he observes. “We need a surge of effort.”

The challenge is enormous. Taiwan’s food supply is alarmingly unregulated, and it would seem to be a testament to the integrity of most food providers that food scandals are not more common. From back-alley noodle and tofu manufacturers to ubiquitous street-side vendors and mom-and-pop eateries, an estimated two-thirds of Taiwan’s food providers operate under the radar of government regulators.

“A lot of these problems have been existing for decades,” observes Kenneth Yeh-Lin Chan, executive director of the Taiwan Food Industry Development Association. “In the old days, certain practices were okay, but now these things are not acceptable anymore. If you don’t upgrade, you’re going to keep disgracing yourself.”

For historical and cultural reasons, street food is almost entirely unregulated, a fact that has not diminished the popularity of night markets. Like owning a firearm in Nevada, it is considered the right of every Taiwanese person to setup a roadside stand to sell homemade dou-gan.

Tsai of the OFS says the TFDA only began a campaign for the mass registration of food providers in April last year in the wake of the olive oil scandal, and has so far registered around 170,000 businesses. But she also estimates that this number represents only around one-third of the total. Further, the registration process entails entering only the most rudimentary information – the name of the company (if any) and the owner’s identity and business address – into the TFDA database. Still, it’s a start on gaining control over a largely unregulated market.

Tsai explains that manufacturers of food additives will need to file more detailed information, “like what kind of additives they produce, the specific ingredients, and the use and sources for all of their products.”

The Kaohsiung health bureau seized nearly 3,000 cans of cooking oil on suspicion that the product had been mixed with waste oil.

Legacy issues

Taiwan passed its first food sanitation law in 1975 and began regulating food additives in 1990. Although food safety was previously covered by a bureau within what was then the government’s Department of Health, it was only as recently as 2010 that those functions were expanded and placed under a specialized TFDA. The legacy of this unregulated market allowed unsafe and unhealthy practices to continue, apparently without many of the violators even being aware that what they were doing was wrong.

“A lot of these problems have been existing for decades,” observes Kenneth Yeh-Lin Chan, chairman of Taisun Group, a major food oil manufacturer, and executive director of the Taiwan Food Industry Development Association. “In the old days, certain practices were okay, but now these things are not acceptable anymore.”

The plasticizer that was used in clouding agents in foods and beverages is a case in point. Kang, who served as the first head of the TFDA, says these additives were in use for nearly four decades without being detected, and most of those employing the substance were probably unaware of its potential harm to human health.

Elden Cheng, vice president of Brothers Farm Foods Co., one of Taiwan’s major tofu and soymilk producers, observes that “the knowledge base for all the food manufacturers is very low” because of the low bar for entry into the market. “For the food industry, the baseline is very low,” he says. “My aunt can decide to manufacture something and sell it online because it’s so easy.” If the government were to establish a licensing program for food vendors, it would force them to gain at least a basic understanding of formal best practices, he notes. “Food vendors could be required to take an exam to demonstrate knowledge of food safety and preparation before being allowed to actually sell their product.”

Taisun’s Chan urges government and industry to work together to achieve a safe and sustainable food supply for the country by improving the knowledge base and modernizing the whole industry. “If you don’t upgrade, you’re going to keep disgracing yourself,” he warns.

A basic challenge will be ensuring that manufacturers are subject to effective periodic inspections. Taiwan has approximately 6,000 food factories big enough to gain the attention of the regulators, but according to information provided by the OFS, the TFDA has only 126 inspectors in its ranks, and they are also responsible for hundreds of thousands of restaurants and other food providers. As a result, the TFDA staff relies on the local governments’ bureaus of health for most of the inspection activity.

But local governments may be too close to the industries in their jurisdiction – their tax base – to be willing to catch them out on violations. Kang says that during his tenure as TFDA head, he experienced situations where the TFDA detected a problem and requested further investigation from the local offices, only to have them reply that “we don’t know where this problem is coming from.” TFDA’s answer was “you should know,” he says. “Like a local police officer should know all of the criminals in his area. It just depends on whether he wants to catch them or not.”

“For the food industry, the baseline is very low,” Elden Cheng says. “My aunt can decide to manufacture something and sell it online because it’s so easy.”

OFS’s Tsai cites another problem with local inspectors: their lack of resources and expertise. “The local bureaus have limited human resources, so when they do inspections they don’t do it in a very detailed way,” she says. “They just look around and make sure that it is sanitary, but they can’t spend the whole day going through the records.”

Communications among different government agencies have also been a problem affecting food safety, along with the absence of a system for tracking imported chemicals and ingredients, as well as a lack of specifications for some important food additives.

Last year’s gutter oil scandal illustrates the gaps in the system. The problem came to light on September 4 when prosecutors investigating a supposed waste oil recycler in Pingtung discovered that the owner of the recycling plant, Kuo Lieh-cheng, was actually making food-grade lard from waste oil. The raw materials included oil from grease traps, waste from tanneries, and diseased animal carcasses (alarmingly referred to as “corpse oil” in major English-language media). The lard was sold to the Chang Guann Co., a prominent food manufacturer, which distributed it – some 243 tons in total – throughout Taiwan’s food supply. It would end in a host of food products, including baked goods and meat jerky.

Although larger food processors are subject to stricter government oversight, Brothers Farm Food Co. opts for meeting the stricter Costco standards that guarantee the quality of its tofu products. Credit: Tim Ferry

The public was of course outraged, but what was also alarming was that the prosecutors who broke the case were from Taichung, a clear indication that the Pingtung authorities had failed in their duties. A farmer in the area had for years complained to Pingtung officials about the factory, but a thorough investigation was never mounted. More disturbingly, the Pingtung Department of Environmental Protection had actually visited to site on two occasions but the inspectors never cited the plant for environmental violations and never mentioned to health officials that it was manufacturing food oils.

“When the EPA inspectors went in and noticed that this is a food production area, they might have asked, ‘why do they have all of these industrial chemicals?’” says former TFDA chief Kang. “They should have called the health inspectors.” But they didn’t, and as Kuo’s factory wasn’t licensed to manufacture food, as far as the health bureau was concerned, it apparently didn’t exist. “We need a better integrated system,” Kang concludes.

Tracking waste oil

Another issue, according to Sheen Lee-yan, a professor at National Taiwan University’s Institute of Food Science and Technology, is that around half of the waste oil produced in Taiwan is collected by independent recyclers, who ostensibly sell it to makers of biofuels or soap. Sheen notes that until the end of 2014, “there was very little tracking and oversight as to where the waste oil went once collected.” Kuo Lieh-cheng not only evaded oversight from health officials, but also from environmental officials (save for the two visits by inspectors). But Sheen says the Environmental Protection Administration (EPA) has recently “implemented a new policy which requires all individuals or companies who collect waste oil to be licensed.”

When the waste oil scandal first broke, Chang Guann initially apologized and declared that it was also a victim of Kuo’s deceit. But the investigation subsequently revealed that Chang Guann since 2008 had imported thousands of tons of cheaper feed-grade lard – intended for animal consumption only – and had mixed it into its food-grade lard, selling the combination throughout Taiwan. Chang Guann was fined NT$50 million and its chairman, Yeh Wen-hsiang, was arrested and faces charges of fraud for his role in the food scandal.

But the case didn’t end there, despite efforts by the government to reassure the public. On September 12, Democratic Progressive Party legislator Tuan Yi-kuang accused the Cheng-I Food Co., manufacturer of 80% of Taiwan’s cooking oils, of also importing feed-grade lard and tallow (lard is rendered pig fat, while tallow is rendered beef fat) from Vietnam and Hong Kong and mixing it with food-grade oils in its domestic factories.

Many of the processed foods available for sale in Taiwan’s innumerable wet markets are manufactured and sold with very little government oversight. Credit: Tim Ferry

Cheng-I is a subsidiary of the Ting Hsin International Group, whose owners, the Wei brothers, first made their fortune – now estimated by Forbes at US$8.6 billion – manufacturing China’s market-leading Master Kong brand of instant noodles. Ting Hsin several years ago acquired the Wei Chuan Food Corp., one of Taiwan’s best-known food brands, and the brothers also became a major shareholder in the Taipei Financial Center Corp., which owns Taipei 101. Eventually a number of Ting Hsin executives, including former chairman Wei Ying-chun, were detained for their roles in Cheng-I’s alleged wrongdoing. Wei was formally indicted on October 30 and faces a possible 30-year prison sentence.

Judging by the number of violations and the long period of time over which they occurred, the use of feed-grade oils in the food supply was clearly a major gap in Taiwan’s food-safety system. The import of feed-grade oils is regulated by the COA, but until the recent scandal the government did not track the materials once they were inside the border. In a well-regulated market, says Kang, the authorities would be able to detect when feed-grade product gets diverted to the food industry. “If you bring in 1,000 tons but only use 100, that means 900 must be going into the food chain,” he explains.

“When the EPA inspectors went in and noticed that this is a food production area, they should have called the health inspectors. We need a better integrated system,” says former TFDA chief Kang.

Taiwan’s tariff schedule exacerbates the problem. According to Tsai, the import duty on feed-grade lard is only 8%, but for food-grade it is 20%, a disparity industry professionals attribute to pressure from the domestic pork industry. The differential provides further incentive for less scrupulous merchants to mislabel the shipment. (Curiously, although Cheng-I imported feed-grade lard and tallow, Tsai says it actually paid the full 20% tariff as if the lard were food-grade. It is suspected that the firm must have received a very attractive starting price.)

Public condemnation of the Wei brothers was scathing, with the common narrative describing a family of scoundrels who had already been involved in a food adulteration case in the 1980s, made a fortune in China, and then returned to Taiwan to once again endanger the public as they lined their pockets.

Industry experts note, however, that while adding feed-grade ingredients to foods intended for human consumption is certainly illegal, it might not be as reprehensible as it seems. In fact, most industry experts describe the “food-grade” versus “feed-grade” label as a distinction without a significant difference, at least in terms of safety. Indirectly, animal feed will likely end up in humans anyway in the form of pork chops and cheeseburgers, and it is generally produced to the same hygienic standards. The difference most often involves matters of quality or taste. Soybean roughage left over from the manufacture of soymilk is not dangerous, it’s just not very appealing to humans, while for lard the difference might be that the fat being rendered comes from the area around the small intestines rather than the more valuable visceral or subcutaneous fat.

Food fraud vs. safety

The feed-grade versus food-grade issue also muddies the distinction between food fraud and food safety. As generally defined, food safety consists of systems dedicated to good hygienic practices, and here Taiwan actually seems to perform rather well. Starting in the 1960s, Taiwan embraced principles of good hygiene in its food system and began monitoring the food supply for pesticide residues, heavy metals, and Persistent Organic Pollutants (POPs) such as dioxin. This longstanding monitoring program, conducted by the COA and health authorities, is considered to have been highly successful. As NTU’s Sheen observes, “Taiwan’s food industry has largely been safe and productive, and continues to produce unique, delicious, and safe food.”

Experts say that what has recently afflicted Taiwan’s food supply is mainly food fraud, or what the industry refers to as “economically motivated adulteration.” According to global food safety auditor NSF International, food fraud is “the deliberate substitution, addition, tampering or misrepresentation of food, ingredients or packaging.” NSF calls it a growing problem globally, not just in Taiwan – one that costs companies and consumers some US$49 billion a year around the world.

Food fraud and food safety are certainly related: if the content of the product cannot be known for sure, how can the safety be verified? But in most parts of the world, food fraud and food safety are usually treated as distinct issues that require their own specific rules and safeguards. Conflating the two can lead to miscalculations in terms both of how to prosecute cases and how to prevent new ones.

For example, in 2013 the media described the copper chlorophyllin found to have been added to counterfeit olive oils as toxic, which is largely untrue. Chlorophyllin – either sodium or copper – is a food colorant derived from the chloroplast of plants. It is used in Taiwan, but is not approved for addition to food oil – a regulation based not on safety concerns but to prevent the production of fake olive oil. In fact, according to a 2012 paper published in the journal Food Research International, chlorophyllin is being studied for its “possible health benefits” due to its “antimutagenic, anticarcinogenic and antioxidant activities.”

Taisun was also implicated in the copper chlorophyllin case – for including the colorant in its grapeseed oil – as chairman Chan acknowledges. He maintains, however, that public safety was never compromised, even by his competitor, the Chang Chi Foodstuff Factory, which took the brunt of the heat in the incident. “Economic crime – that’s how it’s being defined in the rest of the world,” Chan observes. “But in Taiwan it’s presented as a food-safety issue.”

Laboratory tests found the oils made from feed-grade materials to be safe for human consumption. Even the oil made in Kuo Lieh-cheng’s pirate waste oil factory in Pingtung was actually deemed safe for consumption. “While lab tests indicated that the contaminated oil itself, before being used in processed food products, contained levels of polycystic aromatic hydrocarbons (PAHs) and some other harmful compounds at levels above those legally acceptable for human consumption, once the oil was incorporated into processed foods, the processed foods did not test above acceptable levels,” Sheen told TOPICS in written correspondence. “In the lab tests, all the processed foods tested passed acceptable levels.” Crucially, “so far there have been no cases of actual sickness or injury directly related to the oil contamination event,” says Sheen.

Ensuring that food is safe for consumption often involves testing the end-product for unsafe bacteria or heavy metals, but as the oil scandals demonstrate, testing isn’t always helpful in uncovering the crime. More effective in promoting food safety, say the experts, are approaches aimed at preventing adulteration in the first place by promoting supply chain transparency and ingredient traceability.

In fact, the government is currently putting in place just such an array of rules and policies to enhance transparency and traceability in the food chain. Tsai of the OFS says that since December 31, the Ministry of Finance is requiring all firms in the food oil industry with more than NT$30 million in capital to use electronic receipts in all of their business dealings. These electronic records are to be uploaded to the food cloud that is currently being developed with help from the OSF.

The food cloud is a joint project among the TFDA, COA, and EPA to give all regulators ready access to data on food processors and their supply chains, as well as any ingredients that might impact the food market. The EPA will track waste oils, for example, maintaining records on the food cloud to prevent waste oil from entering the food supply.

The COA, meanwhile, has begun tracking all domestic beef. From the moment a calf is born, it is implanted with a tag that traces it throughout its life. The records – which will be invaluable in the case of any outbreak of mad-cow disease or other epidemic – include the animal’s registration number, who its parents were, and what kinds of drugs and hormones it has ingested.

Tsai says that the food cloud is just one of several initiatives to create an overall environment of food safety. The government is also encouraging industry self-management, as well as creation of a third-party inspection system enabling accredited private auditors to augment the work of government inspectors.

“Taiwan’s food industry has largely been safe and productive, and continues to produce unique, delicious, and safe food,” says Professor Sheen. “The stronger inspections are uncovering practices and leading to investigations that ultimately make the food system safer than before.”

Former TFDA-head Kang worries that these efforts may be insufficient and is pushing for more resources to be provided. “To employ 1,000 inspectors, we would need NT$50 million, but the food scandals caused us to lose trade and economic opportunities worth 10 or 20 times that amount,” he says, citing the damage to Taiwan’s reputation for food quality in the global marketplace. He adds that the scandals have tremendously increased the workload for the TFDA staff, even as their morale sags in the face of public criticism and accusations of dereliction of duty. During the recent crises, “everyone worked like crazy – the (lab testing) machines didn’t stop for more than two months,” he observes. “But we were being called lazy and not doing our jobs. People were crying at work.”

According to Kang, Taiwan needs to put emergency measures in place to bring its regulatory regime up to standard after the long history of neglect. As director-general of the TFDA, he recalls, he appealed for more manpower “so we could check all of the underground factories and achieve a more normal situation.” Unfortunately, not enough was done at the time, and in Kang’s view the efforts are still falling short.

NTU’s Sheen, however, offers a more optimistic scenario: that the reason more food safety and fraud issues are coming to light is the result of better surveillance and inspection. “The stronger inspections are uncovering practices and leading to investigations that ultimately make the food system safer than before,” he suggests.

Taiwan Business TOPICS

Taiwan Business TOPICS is published monthly by the American Chamber of Commerce in Taipei, and covers current topic affecting business conditions in Taiwan, an Industry Focus section on a particular industrial sector, and other reports prepared by the magazine’s staff of experienced professional journalists.